Correlation Between Nouveau Monde and Materion
Can any of the company-specific risk be diversified away by investing in both Nouveau Monde and Materion at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nouveau Monde and Materion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nouveau Monde Graphite and Materion, you can compare the effects of market volatilities on Nouveau Monde and Materion and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nouveau Monde with a short position of Materion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nouveau Monde and Materion.
Diversification Opportunities for Nouveau Monde and Materion
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nouveau and Materion is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nouveau Monde Graphite and Materion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materion and Nouveau Monde is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nouveau Monde Graphite are associated (or correlated) with Materion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materion has no effect on the direction of Nouveau Monde i.e., Nouveau Monde and Materion go up and down completely randomly.
Pair Corralation between Nouveau Monde and Materion
Considering the 90-day investment horizon Nouveau Monde Graphite is expected to under-perform the Materion. In addition to that, Nouveau Monde is 1.11 times more volatile than Materion. It trades about -0.11 of its total potential returns per unit of risk. Materion is currently generating about 0.02 per unit of volatility. If you would invest 11,378 in Materion on August 25, 2024 and sell it today you would earn a total of 298.00 from holding Materion or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nouveau Monde Graphite vs. Materion
Performance |
| Timeline |
| Nouveau Monde Graphite |
| Materion |
Nouveau Monde and Materion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nouveau Monde and Materion
The main advantage of trading using opposite Nouveau Monde and Materion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nouveau Monde position performs unexpectedly, Materion can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Materion will offset losses from the drop in Materion's long position.| Nouveau Monde vs. Vale SA ADR | Nouveau Monde vs. Teck Resources Ltd | Nouveau Monde vs. MP Materials Corp | Nouveau Monde vs. BHP Group Limited |
| Materion vs. Skeena Resources | Materion vs. Compass Minerals International | Materion vs. IperionX Limited American | Materion vs. EMX Royalty Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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